AfDB throws Kenya new debt lifeline amid Eurobond jitters
Business
By
Brian Ngugi
| Feb 01, 2024
The African Development Bank (AfDB) has pledged a new liquidity lifeline for the cash-strapped Kenya Kwanza administration to settle its maturing obligations amid mounting concerns about Kenya's repayment ability.
The pan-African lender said on Wednesday it is in talks with the National Treasury on how to help deal with some of Kenya's massive obligations that have triggered widespread default concerns.
"The bank is engaged in negotiations with the National Treasury to explore ways to use guarantee instruments (guarantee schemes) that enhance Kenya's ability to access global financial markets to finance its budgetary needs," said AfDB in emailed responses to The Standard's queries.
"The bank is currently engaging the Cabinet Secretary National Treasury, Professor Njuguna Ndung'u, on how best to leverage the country's reserves as guarantee to mobilise additional resources to support repayment of maturing bonds and other debt obligations."
AfDB Secretary General Vincent Nmehielle told The Standard separately in an interview Kenya has shown "the ability to meet its maturing debt obligations."
READ MORE
Two years after the Mathare floods, survivors are safe but still scarred
Prof Mutua should face MPs for grilling on victims payouts
Government should address issues raised by young people without resorting to intimidation
Subaru driver in a dramatic high-speed chase after alleged hit-and-run in Nairobi
Bottled water exempted from excise duty
Kenya out to increase its participation at LA28
Initiative to upskill youth in construction sector launched
Cyril Maloba: The math teacher who refused to stop
Knec call for KCSE candidates as curtain falls on 8-4-4 education system
'A criminal act of the State,' Orengo says of Lichuma torture claims
"The partial payment of the maturing Euro bond of June 2024, is a testament to the government of Kenya's ability and desire to meet its debt obligations," he said while allaying fears of the possibility of a default for Kenya," he said.
AfDB approved budget support to Kenya last year amounting to Sh12.8 billion. The loan is expected to be finalised this year ahead of disbursement. The bank said once this is done, another budget support operation of an unspecified amount is expected to be processed in the third quarter of this year.
Professor Nmehielle spoke ahead of the 59th Annual Meeting of the Board of Governors of AfDB, which will be held from May 27-31 at the Kenyatta International Convention Centre (KICC). The theme of the meeting, which will bring African Finance ministers and heads of government to Nairobi, will be Africa's Transformation and Reforms of the International Financial Architecture.
"The objective of the theme is to bring to the fore the urgent need for reforms of the international financial architecture to mobilise resources at scale and accelerate the pace of Africa's structural transformation," said Prof Nmehielle. AfDB is set to give Kenya a financial lifeline at a time economists have issued a fresh dire warning, emphasising the urgency for the Ruto government to take immediate action to avert a potential economic collapse caused by the impending Sh320 billion Eurobond repayment in just five months.
The repayment plan for Kenya's $2 billion (Sh334 billion) Eurobond, which is scheduled for June this year, has sparked controversy and is being keenly watched by global investors.
How Lapfund's mega development redefines Nairobi, tests infrastructure
Nairobi's South C neighbourhood is transforming through the Lapfund Bellevue housing development, one of the city's largest mixed-use residential projects.How Kenya's green energy revolution is attracting global climate capital
Kenya is positioning itself as Africa's climate solutions hub by leveraging its renewable energy leadership and strategic international partnerships to attract investment.Audit raises red flag as domestic debt hits Sh862b on borrowing spree
The National Treasury departed from the approved Medium-Term Debt Management Strategy by significantly increasing domestic borrowing without parliamentary approval.Lamu refinery eyes Africa's 86 million tonnes fuel import gap
A planned Sh2.2 trillion refinery in Lamu is expected to strengthen Africa's fuel security by reducing the continent's growing dependence on imported petroleum products.Lamu residents demand transparency in proposed Sh2.2 trillion oil refinery
Leaders and residents from Lamu have called for transparency in the proposed Sh2.2 trillion oil refinery project saying so far the deal has been shrouded in secrecy.MOST READ
How Lapfund's mega development redefines Nairobi, tests infrastructure
FINANCIAL STANDARD